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Thursday, 29 October 09
INDIA MMTC TENDER SET TO BOOST S.AFRICA COAL


The South African coal market is set to be boosted further by India's state-owned trading firm MMTC Ltd's tender for 12.5 million tonnes, Indian traders participating in the tender said.

Indian demand for South African coal has been the most important factor supporting prices at over $60.00 a tonne FOB Richards Bay throughout this year.

India has accounted for around 14 million tonnes or 35 percent of South Africa's coal exports this year - a proportion which will rise if state power plants begin taking South African coal instead of Indonesian.

South African coal prices will also rise if the Indian power sector takes a potential extra 4 million tonnes, traders said. Until now, South African coal has been bought by Indian end-users in the cement and sponge iron sectors.

Speaking on the sidelines of the Coaltrans coal industry conference in London, traders said MMTC was expected to award the tender for one year's supply shortly.

"They called all the shortlisted companies in to open the tender and then they delayed again. The Commerce Ministry had not given clearance," one trader said.

"South African coal could easily make up 30 percent of the tonnage. It's a good coal, it's competitive and it works well into the Indian power sector," another trader said.

South Africa's exports will fall this year to around 60 million tonnes from 67 million last year due to rail restrictions.

At best, South Africa will export no more than 69 million tonnes next year, industry sources said.

Any increase in Indian demand will boost prices, they said.

MMTC awarded its 12.5 million coal tender in June to traders Adani, but was forced to scrap it and re-tender after accusations of unfair terms by a participating company which was disqualified.

After re-tendering, Adani, Bhatia, Coal & Oil and Agarwal were shortlisted. The Commerce Ministry is closely overseeing the coal tender and will have to approve the final award before it is made, traders said.
Source: Reuters



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